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Hit with a tax?

Let’s put it up for a referendum unless council votes not to renew it.

When we meet our friends for a dinner in the city limits we are hit with of tax of 11.5%!

Some of our friends will not join us. They prefer North Myrtle or Surfside Beach where they don’t have to pay the tax. Some drive out of town to shop to save the 1%.

Of the TDF tourism tax, 80% goes to the Myrtle Beach Area Chamber of Commerce for advertising and promotion outside South Carolina. Approximately 16% subsidizes select homeowners within the city with real estate property tax rebates for owner occupied primary resident property and approximately 4% goes to the city for tourism related capital projects. Among losers are vacationers, real estate investors, and renters.

The chamber wants city council to reinstate the tax another 10 years, extending it from 2019 to 2029. For the tax to be continued, Myrtle Beach city council has to either hold a referendum or vote it in themselves. Let’s put it up for a referendum unless council votes to not renew it.

Background of the TDF:

This is a 1% tax on all things normally taxed and also includes accommodations and amusement expenditures in the city.

The TDF was begun in 2009 by legislation passed that allowed the city council to vote it in or to have a referendum. Council opted to leave voters out and voted it into law.

In February of 2016, well in advance of the TDF’s expiration in 2019, legislation was once again introduced to extend the tax to 2029. Governor Haley’s veto of the South Carolina House bill on this was overridden.

Why the TDF is NOT RIGHT:

Taxes are meant to benefit all the public with things we can’t do alone.

Taxes are not for advertising businesses, but rather for public safety, infrastructure including outfalls to mitigate ocean water bacteria and storm water management, water and sewer services, emergency services including fire and beach rescues, trash pickup, etc. Taxes are not for advertising businesses and especially not exclusively tourism businesses. I own a home but also a business. I do not expect taxpayers to advertise my company. I primarily rely on internet ratings, referrals and repeat business. For decades the chamber has focused on marketing businesses without receiving any money from taxpayers. Members pay to join the Chamber and pay for any extra services or advertising they want.

This $20 plus MILLION annually could have been used for safety and removing pollution from our beach via outfalls extended into the ocean. Had we not given $150+ Million over the last 10 years to the chamber, this could have already been accomplished if the law had been written differently. Then we would have had a clean beach to attract tourism. One not polluted when it rains.

The free market needs to reign according to the law of supply and demand. If hotels are overbuilt some need to close. If businesses are obsolete, they need to reinvent or close. If businesses have bad ratings due to poor management or service, taxpayers do not need to try to attract new customers because they can’t keep the ones they have. Taxpayers should not have to pay to attract more people here because current tourists pledge never to return due to onerous fees, traffic loops, poor water quality, and/or a lack of free parking.

It is regressive and hurts those who can afford it least.

This tax primarily benefits, in addition to the chamber, resort and amusement owners and managers. The people who work for them might have to work 2 jobs to make ends meet. Over half of all kids in Horry schools are on reduced or free lunch programs. The media reported that “two-thirds of U.S. would struggle to cover a $1,000 crisis.” College students fall into this category if they, like me, had to work throughout college. This tax takes from the poor and gives to the affluent. According to Kids Count in 2014 in Horry County 29.9% of children lived in abject poverty. Tax money their families have to pay to the Chamber or to property owners takes away from providing for their basic needs!

People should not have to pay other people’s property taxes.

The property tax rebate % for TDF funds was .8258 last year, and there is no cap, so a million-dollar home benefits its owner hugely compared to a $100,000 home.

Adult kids living with family because they can’t afford to move out get $0

Investors get $0

So renters, tourists and investors are potentially paying toward a $7,679 annual credit for an ocean front Golden Mile resident every time he or she shops in the city for clothes, school supplies, and all household items or eats prepared food. Tourists also pay the 1% tax on accommodations and amusements. Many locals can’t afford to pay to enjoy local amusement venues.

I was just sent a copy of Horry County property tax records that shows taxes paid on one residence on Club Drive reflected a credit of $22,315.83 for that ONE YEAR for taxes paid on 12/19/17.

According to the county’s website state accommodations taxes are for the specific purpose of promoting tourism in counties. With the TDF, the city accommodations tax, and the state tax, there are 3 taxes on tourists.

The Chamber already gets 30% of Horry County ATAX accommodation tax money. Their contract with the county reads “Provider shall receive 30% of the quarterly State ATAX funding received by the County as calculated in S.C. Code of Laws, Section 4-6-10.” ATAX is accommodations taxes. An example is $467,399.84 they received out of the $1,582,999.45 check that was dated 11/13/15 from the Office of State Treasurer.

It is not working.

Fiscal Year 2017 Accommodations Tax receipts by county report from the SC Department of Revenue proves the “It’s Working!” claim is deceptive. While A-Tax receipts in Horry County are up, a true evaluation of the effectiveness of the TDF in promoting tourism must be by comparison to the rest of SC.

Horry County has increased A-Tax receipts for the 2009 to 2017 period — since the TDF was imposed — by 48.2%. Meanwhile, A-Tax receipts for the entire state increased 66.4%. Charleston County — the only other county eligible to impose a TDF — increased its A-Tax receipts by 95.8% without a TDF. In another comparison, we find that the Grand Strand of Horry and Georgetown’s share of statewide A-Tax collections has declined from a peak of 39% in Fiscal Year 2012 to 34% for FY 2016 and FY 2017. Meanwhile, Charleston and Beaufort County’s share has increased in the same time span from 35% to 38%.

According to the Dept of Revenue’s reports Horry went from $14,407,623 to $19,884,491 from 2009 through 2016, an increase of $5,476,868 whereas Charleston County’s A-Tax went from $8,994,828 to $15,427,128, an increase of $6,432,300. It is erroneous for Mr. Dean to credit the TDF with all increases when these increases have even been exceeded by communities without the tax.

Increases in A-Taxes paid occurred due in part or in full due to room rate increases that generate more taxes being paid. For example in 2009 one motel in NMB was charging $95 per night at peak July rates and this in 2017 it was $135. The increases in rates meant more taxes were paid. Therefore, it is also safe to say that rate increases of about 4 or 5% a year can be reason for the bulk of the increase in taxes paid since 2009.

Furthermore, the chamber has for years been quoting firm tourism numbers. Most recently 18 million annual visitors. However, I recently received via a FOIA request from the Department of Parks, Recreation and Tourism estimated figures from the Research Director of that state department. He sent their estimates for every county in the state. Their figure for tourism in the entire county including North Myrtle and Surfside is 10 million less. What happened to this 10 million? Where they hiding in campgrounds and timeshare units so the state could only see 8 million? Brad Dean was recently quoted in the Sun News trying to explain his numbers but ended in quicksand by saying counting tourists is like trying to count angels on the head of a pin. The chamber is still saying we have 18 million and now the “community” has a goal of 20 million by 2020. Fake news?

In conclusion.

We need to put the goal of the city putting “heads on beds” to rest. We need to focus on city business and let voters decide by vote about the TDF if council does not have the fortitude to end this tax.

It is not right because taxes are not for advertising, it is exceedingly regressive, it is not working, and it is not needed. The TDF impacts every citizen in this city as well as our visitors yet only the privileged benefit.

In the future we should elect fiscally-responsible city council members and a mayor to create a welcoming, safe city with clean beaches and minimal taxes and fees while utilizing a stringent adherence to ethics in public management at all levels of city government.

(5% State Sales Tax + 1% State Tax Relief + 2.5% Hospitality Fee* + 1% Local Education Capital Improvements Sales Tax + 1% TDF + 1% Ride III = 11.5% minimum. However, some establishments choose to pass part or all of the 5% State Liquor Excise Tax directly to the customer, rather than including it in the price of the drink, for a total of up to 16.5%)

There are some counties in South Carolina according to the Department of Revenue, such as Beaufort County, with no local option taxes so their tax is 6%.

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About AA Dunham

Ann Dunham is a Myrtle Beach business leader and the owner of Executive Services.
An office support services firm established in Myrtle Beach in 1977. Purchased in 2001 by Ann Dunham.
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